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Retail results in 2016 a ‘mixed bag’

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Retail sales have picked up slightly in May, following April’s decline, according to the latest CBI quarterly Distributive Trades Survey.

More than a third (36%) of the 60 retailers surveyed said that sales volumes were up in May over a year ago, while 29% said they were down, giving a balance of +7%.

This was in line with expectations (+9%), and an improvement on the previous month’s balance (-13%).

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But sales are expected to drop slightly next month, and orders placed on suppliers fell sharply over the year, at their fastest since March 2009, CBI said.

Internet sales volumes grew significantly (+49%) on the previous month (+19%), outstripping expectations, although growth is expected to see a small fall in June.

Retailers expect a marginal improvement in the business situation in the next three months, but sentiment is improving at a weaker rate compared with the past year.

Meanwhile, 41% of wholesalers reported sales volumes to be up on last year, and 15% said they were down, giving a rounded balance of +27%.

Rain Newton-Smith, CBI Director of economics, said: “A bit like the start of the British summer, it’s been a mixed bag for the retail sector this month. Whilst sales have risen a little, they are expected to fall again next month, and orders have dropped sharply.

“Even though low inflation is still boosting pay packets, retailers are continuing to operate in a tough environment, with strong price competition squeezing margins.

“With a cloud of uncertainty hanging overhead, particularly from challenging global conditions and the outcome of the EU referendum, it’s not surprising to see investment intentions deteriorating and business sentiment levelling off.”

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